The Group of Seven (G-7) nations plan to raise $600 billion over the next five years for a global infrastructure program that will serve as a “positive alternative” to models that sell “debt traps.”
G-7 leaders from the United States, Canada, Germany, Italy, Japan, and the European Union unveiled the Partnership for Global Infrastructure and Investment (PGII) at a summit in Bavaria, Germany, on Sunday.
The White House said that Washington alone would mobilize $200 billion for the PGII “through grants, federal financing, and leveraging private sector investments” by 2027, and “this will only be the beginning.”
“The United States and its G-7 partners will seek to mobilize additional capital from other like-minded partners, multilateral development banks, development finance institutions, sovereign wealth funds, and more,” it said in a statement.
U.S. President Joe Biden said the investments would be made toward four critical areas: “health and health security, digital connectivity, gender equality and equity, climate and energy security.”
“I want to be clear: This isn’t aid or charity; it’s an investment that will deliver returns for everyone, including the American people and the people of all our nations,” Biden said at the summit.
“It’ll boost all of our economies, and it’s a chance for us to share our positive vision for the future and let communities around the world see for themselves the concrete benefits of partnering with democracies,” he added.
China’s Belt and Road Initiative
The PGII was launched a year after Biden introduced the Build Back Better World initiative at the 2021 G-7 summit, at which he said the program would reflect the values of democracies rather than “autocratic lack of values.”
“What’s happening is that China has this Belt and Road Initiative, and we think that there’s a much more equitable way to provide for the needs of countries around the world,” Biden said in June last year.
The U.S. Treasury Department also described the PGII as a “transparent partnership” that will serve to meet the “enormous infrastructure needs of low- and middle-income countries without trapping them in cycles of debt.”
The program appears to rival China’s Belt and Road Initiative, which was launched by Chinese leader Xi Jinping in 2013 to increase Beijing’s trade networks by financing infrastructure projects throughout Southeast Asia, Africa, Europe, and Latin America.
In recent years, critics have denounced Beijing for using “debt-trap diplomacy” to lure countries into its initiative. Many countries have surrendered pieces of their sovereignty after failing to pay off Chinese debts, notably Sri Lanka, which leased its Hambantota Port to China for 99 years to convert its owed loans of $1.4 billion into equity.
Frank Fang contributed to this report.